California Introduce Online Gaming Bill

This past Friday, Senator Darrell Steinberg (D-Sacramento) and Senator Roderick Wright (D-Inglewood), both senators of the state of California, recently introduce an online gaming bill that would allow for online poker to be initiated and played within the state. This comes amidst concerns and discussion over what action should be taken towards state and federal implementation as well as regulation for online gaming.

The Internet Gambling Consumer Protection and Public-Private Partnership Act of 2012, also known as SB 1463, introduced on February 24th, 2012, details how the bill seeks to generate revenue from the legalization of online poker in an effort to improve the financial health of the state and create “hundreds of millions of dollars” for the 2012-2013 fiscal year. The financial health of the state has been under scrutiny as of recent due to its concerning budget crisis history. The state has come under threat by looming debt and only recently has it considered using online gaming as a method of control, having previously overlooked the possibilities it could bring.

If the bill were to become law, operators will be required to apply for a 10-year license as soon as the regulatory framework is in place and implemented effectively. If approval foes through, a licensing fee of over $30 million will need to be paid by operators, which will be credited against gross gaming revenue proceeds. This will however only take place over the first three years whilst operating; the initial licensing fee will not impact further on revenue taxes and accounting.

Further implementation of the bill shows that for the inaugural 2 years, only online poker would be regulated and permitted, whilst other online gaming equivalents would not be prevalent until after the 2 year period has elapsed. The bill states that “After that two-year period, the department may phase in other games allowed under the California Constitution and the Penal Code.”

Sen. Roderick Wright had previously failed in his attempts to push forward and online poker bill through legislature. However, reinterpretation by the United States Department of Justice of the Wire Act has reignited attempts at legalizing online poker and gaming.

Despite the direction towards legalization, there are still concerns over the divided tribal casino community residing with California. Whilst some are wholeheartedly open and expecting this new platform, others are reluctant, citing that they believe there will be less market competitiveness and will create an unfair preference which will favour the larger giants within the industry.

The contribution of tribes to the state is seen as crucial, as they generate millions of dollars in revenue. Alongside this, gaming compacts to the state also helps to fund and donate to political campaigns. The growing scepticism of tribes could push political favour in doubt, making it a much tougher decision to reach.